The American Prospect has posted an excellent article on the IRS privatization program- particularly all the shady and suspicious political donations that seem -but have not been proven- to be the driving force behind the program.

Also, the article sheds some light on one of the mysteries of the privatization program- that it's found a staunch supporter in Rep. Bart Gordon (D-TN) (emph. mine).

The connection between CBE and Grassley, though, is tenuous; the connection between Pioneer Credit [one of the private debt collectors] founder and chairwoman Kathleen Balus and New York's 26th District Representative Thomas Reynolds is not. In 2006, Balus gave Reynolds $2,000. She has also donated thousands of dollars to Republican PACs, several of which have given Reynolds hefty contributions. Balus cannot be characterized as anything but a high-dollar Republican donor. According to the FEC's donor database, her donations to mostly Republican candidates and causes (Tennessee Democrat Bart Gordon manages to keep the list from being totally Republican) have totaled $42,500. Meanwhile, Reynolds, who has benefited greatly from Balus's contributions, is the member of Congress who sponsored the amendment that gave the IRS power to begin outsourcing.

Anyway, there's still one general question that needs answering. How did these contracts end up in the hands of these politically-connected companies? Did representatives intervene? How could have they have influenced the contract competition?

Sounds like it'd be a good topic for a congressional investigation...

A good story in the American Prospect on contract cronyism. The contract in question is another one of these contracts that's put up for competition, but, mysteriously, ends up in the hands of a close associate of powerful people in government.

More than just "no-bid" contracts are susceptible to political manipulation- even fully competed contracts can get shady. Makes you wonder if it's worth taking the risk of contracting these services out in the first place.

UPDATE: Check out FedSpending.org for the profile of the contractor in this article - MZM, Inc..

In weird sort of Zen meditation on the nature of oversight, the Department of Education overlooks a stark conflict of interest by selecting the company which implemented a billion-dollar reading program to evaluate the very program that it implemented. And the company in question has been criticized by the Ed. Dept.'s inspector general for failing to avoid conflict of interest problems when it originally implemented the program.

Reading First, part of President Bush's signature No Child Left Behind education law, provides intense reading help to low-income children in the early elementary grades. RMC Research Corp. was hired to establish and implement the program starting in 2002, under three contracts worth about $40 million.

Recently, the Education Department's inspector general reported that RMC failed to keep the program free of conflicts of interest. For example, RMC did not screen subcontractors for relationships with publishers of reading programs.

Now, Reading First is in the midst of a congressionally mandated evaluation under a 2003 contract with a team that includes RMC, based in Portsmouth, N.H.

(h/t ThinkProgress)